The claim arose from efforts to recover gold from the wreck of the SS Islander which sank off the coast of Alaska in 1901 carrying gold valued at the time at $6 million.  One party to a joint venture recovery company withheld computer data, photographs, videos, imaging, readings, logs and journals downloaded on a media disc and thus prevented the recovery operation by the other party.  The court had no difficulty in finding that the electronic data withheld is not tangible property.

The property covered “property damage” which was “physical injury to tangible property”.  The claimant’s loss flowed from the lack of access to the data describing the ship’s location and contents not the tangible items in which the data may have been stored.  Data is, by definition, intangible property.  In addition, the policy covered an “occurrence” as “an accident” and the event was not unforeseen, involuntary, unexpected and unusual as required by the policy.  The co-insured joint venturer who withheld the data was aware of the likely consequences of their failure to turn over the intellectual property yet they wilfully elected not to.

American Insurance Co v May Case no. 2:21/cv/01002 in the US District Court for the Western District of Washington